Accounting Malpractice 101: What You Should Know
Like any other professional, accountants are held certain standards and are required to abide by the law and follow these standards at all time when providing their services. In the instance that a client suffers direct losses due to the fact that an accountant did not fulfill their role as professional, that client is entitled to file an accountant malpractice lawsuit.
The GAAP – Accountant Standards Of Conduct
The particular rules that accountants are expected to follow are laid out by in the General Accepted Accounting Principles (GAAP) in addition to the rules listed by the American Institute of Certified Public Accountants in addition rules set by the State.
Certified public accountants, certified tax preparers, accounting consultants, and asset managers are all expected to follow specific guidelines and rules:
- Do not knowingly misrepresent details or facts
- There can be no conflict of interests
- Only provide services that can be completed competently and with professional care
- Meet the requirements of licensing
- Keep client communications confidential
To establish a case of accounting malpractice, the claimant must have suffered monetary losses directly related to the alleged malpractice.
The Most Common Instances Of Accounting Malpractice
- Maintaining substandard financial records
- The preparation of incorrect financial reports and business statements
- Failure to recommend an audit to clients
- Making mistakes on tax returns
- Giving out bad, incorrect, or illegal tax advice
- Inventory errors
- Subpar evaluation of documents and financial statements
Breach of Contract
In accounting malpractice cases, breach of contract usually occurs intentionally or negligently. When an accountant deviates from standardized practices knowingly or carelessly, a case for accounting malpractice can be made.
For a breach of contract case to be viable in court, a few things must determined and established. First, there has to be an agreement between the accountant and the claimant to render professional services. After the establishment of an agreement, the claimant has to experience loss, damages, or financial harm that is a result of the accountant’s lack of professionalism or negligence.
When an accountant intentionally misrepresents details in order to mask their transgressions, an accounting malpractice case can be made based on those misrepresentations. To claim an accountant is guilty of intentional misrepresentation, a few things have to be established:
- There was an actual representation
- That representation was incorrect
- The misrepresentation is based on a current or past tangible fact
- The misrepresentation can actually be proved right or wrong
- The accountant persuaded the plaintiff based on that misrepresentation
- The plaintiff relied on that misrepresentation and suffered losses
- The misrepresentation can be directly tied to the losses.
Contact Lydecker For A Legal Consultation
Accounting malpractice cases are intricate and often very complicated due to the specific determinations that must be made in order to establish a viable case. At Lydecker, we have years of experience in recovering damages for our clients that were victims to accountant malpractice. Our Miami accounting malpractice attorneys are ready to speak with you and are fully dedicated to your best interests. Contact us today for a legal consultation.